Provincial Energy Demand and BESS

Posted on June 4, 2018

Based on the structure of Ontario’s energy market, the way you manage your power demand during major peak hours can either save or cost you a lot of money. For eligible Class A Global Adjustment (GA) consumers, charges are incurred based on their contribution to the province’s peak consumption during the top 5 hours of the year. This means the electricity bill that they pay is relative to how their business behaves when the province needs to conserve power the most. Typically, the province has an abundance of power supply during the majority of the calendar year.

Economically speaking, a surplus of power cannot be stored in the same manner as a surplus of material goods and resources, like water. Storing power only becomes profitable when the marginal cost of electricity fluctuates more than the cost of losing energy in storage as well as the costs of storing and distributing the energy. Here is where Battery Energy Storage Systems (BESS) come into play. BESS are able to reduce a user’s proportional share of the on-peak demand by implementing Behind the Meter (BTM) storage.

BESS can be installed behind a user’s utility net meter, which monitors the electricity usage for that system. Therefore, in the event of a peak hour, the user can discharge the battery, significantly reducing or even completely relinquishing grid demand when electricity is most expensive.

For users participating in the Industrial Conservation Initiative (ICI), those with traditional GA strategies are in some ways taking a gamble. Consumers who are conscientious about their GA strategy are still at risk of incurring heavy costs. It depends on your strategy for reducing demand from the grid during critical peak hours as well as your method for anticipating when the peak hour will occur.

One popular GA strategy among industrial consumers is to curtail production during the IESO’s predicted peak hour forecast. However, the IESO’s forecast is not 100% accurate and the plant might be reducing their energy demand during an hour that is not on-peak. Thus, this strategy is a double-edged sword because if consumers miss even 20% of their peak, they are both limiting output for poor results, while also incurring a higher rate of GA costs for running at full power during the actual peak hour. This is not due to the IESO’s peak tracker being unreliable, but because the public availability of the information leads to an unpredictable demand forecast.

As more businesses opt into the ICI, it becomes increasingly difficult to predict when peak hours will occur. Some of the fluctuations in power demand are a result of a large number of businesses trying to conserve energy at once, which often causes “false peaks”. A false peak is when the IESO predicts a peak hour, but due to reactive industrial behavior and external factors, the provincial demand falls below the peak threshold. Furthermore, a double peak is similar to a false peak, but instead of the peak not occurring, the peak hour falls on the hour before or after businesses reduce their demand.

If every semi-truck driver was made aware that there would be heavy traffic on the 401E going into Vaughn around 5:00 pm and in order to take the fastest trip possible, they all decided to take the 401E at 3:00 pm. The reaction of this large population, in turn, results in lighter traffic at 5:00 pm and relatively heavier traffic at 3:00 pm. The mapping equivalent of implementing battery storage technology in BTM systems would instead give certain truckers access to an alternative route, the 407. BESS offer contingency alternatives. They provide insurance through backup support, which allows businesses to continue operating at as close to maximum efficiency as possible while mitigating grid demand, and most importantly saving you money.